Bits & Pieces
By John J. Lothian
Tomorrow I participate in a panel discussion at the Chicago Federal Reserve in a program put on by the Chicago Civic Federation. I will be talking about the history of this industry and its impact on jobs.
I will also be sharing some of my thoughts on the importance of STEM for Chicago financial markets and the rest of the economy. I believe I have the right audience to share some of my ideas for making Chicago the STEM capital of the world.
The title of the program is the uplifting “Sold Out: Chicago’s Fiscal Future: Growth or Insolvency?” Details can be found here
The FinTech Exchange 2017 program is coming up April 27. It is not to be missed
Our friend John Sodergreen will soon be celebrating 20 years of Scudder Publishing Group, an energy trade news publishing company based in the Washington, DC area. They publish five weekly and monthly newsletters covering the competitive energy and bandwidth sectors. Congrats to John and Scudder.
Lastly, on June 1 we open up registration for our MarketsWiki Education Summer Series with dates in New York on July 11 and 12 and Chicago on July 17, 19 & 21. We have a great lineup of speakers. You can see the details here
$43M in cash found in empty Nigerian apartment
More than US$43 million was seized from an apartment building in Nigeria after the anti-corruption unit received a tip. The Economic and Financial Crimes Commission received a tip from a whistleblower who reported suspicious activity when they noticed someone moving bags in and out of the apartment, according to a Facebook post.
****JB: Can’t believe I kept deleting all those emails.
Chain Appoints Tom Jessop as President
Chain Inc. today announced that Tom Jessop has been appointed as President, effective immediately.
***** Chain is such a direct name.
Congressman Thomas Reed to Speak at 2017 Options Industry Conference
OCC, the world’s largest equity derivatives clearing organization, today announced that Congressman Thomas Reed (R-NY 23rd District) will be a featured speaker on May 10th at the 2017 Options Industry Conference. Congressman Reed and OCC Executive Chairman and CEO Craig Donohue will have a “fireside chat” about the outlook for Congressional action in 2017 and significant items on the Hill’s agenda as they relate to the U.S. listed equity options industry.
***** The issue is not getting a politician to speak, it is getting them to…..(fill in the blank)
Monday’s Top Three
It was as close a race as you could have for top three yesterday – one view separated each of them. First up was the WSJ’s article about one Duke University professor who has a beef with commodities, Commodities in Your Portfolio? It’s All Hogwash, Says Wall Street Dissenter. In second was an update on an infamous incident, The ‘London Whale’ trader lost $6.2 billion, but he may walk off scot-free. Last was a neat little infographic detailing the world’s largest stock exchanges.
98,227,800 pages viewed; 22,464 pages; 205,385 edits
FlexTrade unveils augmented reality trading technology; New technology will provide a more interactive order blotter and trade charting.
Hayley McDowell – The Trade
FlexTrade Systems has launched an augmented trading application, known as FlexAR, for its execution management system (EMS).
M&A playbook: how to get the EU to approve a takeover; The key tests companies must pass to win backing from tough regulators in Brussels
Rochelle Toplensky and Michael Pooler – FT
It was the blunder that may have cost them the deal. On Tuesday, February 7 at 11:56pm ó just four minutes before the deadline ó London Stock Exchange Group and Deutsche Bˆrse sent Brussels a meagre offer to sell the LSE’s French clearing arm.
U.K.’s Theresa May Calls Early Election, Seeking Brexit Leverage; Victory in election, scheduled for June 8, could give Mrs. May more leeway in coming negotiations with the EU
Jenny Gross and Jason Douglas – WSJ
British Prime Minister Theresa May said Tuesday she would call an early general election on June 8 in an apparent effort to give herself more leeway in upcoming exit negotiations with the European Union.
Chicago high-speed trading firms draw overseas talent
Lynne Marek – Crain’s Chicago Business
Chicago’s high-speed trading industry is so secretive, it’s easy to overlook the worldwide magnet the city has become for the business. Two Dutch companies, Optiver and IMC, set up shop downtown more than a decade ago and have grown to more than 200 employees each. Now, they’re expanding again. They’re among a contingent of companies and professionals from other countries who have joined the city’s trading ecosystem, even as electronic trading makes it simpler to trade futures and options anywhere.
Britain’s finance watchdog says EU access vital for healthy competition
Huw Jones – Reuters
Access to markets and workers in the European Union after Britain leaves the bloc is essential for maintaining healthy competition in financial services and avoiding disruption, the UK’s markets watchdog said on Tuesday.
Paul Volcker stands tall against attacks from banking industry; The Volcker rule could survive Trump’s attempts to deregulate the financial system
Patrick Jenkins – FT
The fourth floor of the Rockefeller Center’s southern wing is a building site. Plasterboard walls have been ripped out. Cables, water pipes and a few bare lightbulbs hang from the ceiling. But not everyone has moved out. At the end of the corridor is a shabby door, with a broken doorbell and ragtag gold lettering announcing it as the office of Paul A Volcker.
Larry Fink Q&A: “I Don’t Identify as Powerful”
Erik Schatzker – Bloomberg
Is $5.1 trillion enough? Not if you’re Larry Fink. The man who built BlackRock Inc. and helped popularize exchange-traded funds now has ambitions to turn the world’s largest asset manager into something more like Google. It’s all about Aladdin, the pioneering software his company developed to analyze investments. Fink sees Aladdin becoming the Android of finance and predicts technology will soon become one of the biggest of BlackRock’s businesses, with revenue approaching $5 billion in five years.
Banks quote rock star prices in rushed research deals; City fears over jobs as talks ahead of the Mifid II deadline reach fever pitch
By Tabby Kinder – Financial News
Talks to agree a price for investment research – which has to be sold separately under looming European Union rules – have taken a chaotic turn.
Is MiFID II the Final Nail in Active Management’s Coffin?
Valerie Bogard – Analyst, TABB Group
MiFID II and the shift to passive management threaten the very existence of active equities managers. But few buy-side firms are prepared to meet these challenges, according to TABB Group’s 2017 US Institutional Equity Trading Study. And the ability of both large buy-side and sell-side firms to adjust at this time of transition by leveraging their spending power will widen the gap between small and large players even further.
“Let’s put the Italian stock market under government management as part of Brexit talks,” former MTS?CEO?says
by Antonella Olivieri – Italy Europe24
Former MTS CEO?Gianluca Garbi is probably one of the best-placed people to gauge the impact of Brexit on the Italian Stock Exchange and its MTS bond trading platform, given that they are part of the London Stock Exchange group. Now that LSE?will no longer merge with the Frankfurt’s Deutsche Boerse, it’s time to take a hardheaded look at the future shareholding structure of Italian financial markets. In this interview, he launches a provocative proposal: to place MTS?under government management.
Exchanges, OTC and Clearing
CME Patent Sees Derivatives Opportunity in Bitcoin Mining
Stan Higgins – Coindesk
Derivatives giant CME Group is looking to patent a way for bitcoin miners to hedge against operational risks. As detailed in a patent application published last week by the US Patent and Trademark Office, the proposed system would receive data from the bitcoin network as a means of keeping contracts up to date – monitoring metrics like network difficulty and price.
OCC Names David Hoag as Chief Information Officer
OCC, the world’s largest equity derivatives clearing organization, today announced that David Hoag, a technology executive with nearly 25 years of information systems and development experience, will join OCC as Senior Vice President and Chief Information Officer, effective May 1st. Hoag, who will report to John Davidson, OCC’s new President and Chief Operating Officer, succeeds Luke Moranda, who becomes Senior Vice President and Senior Information Technology Advisor to the President and COO.
Did You Know About The NYSE ARCA System Disruption on April 10th?
Themis Trading Blog
On April 11th at 6:01 pm, NYSE ARCA sent this Trader Update: Quotations from NYSE and NYSE MKT for securities listed on NYSE and NYSE MKT were not received by NYSE Arca on Monday April 10, 2017.
NZX Joins UN Sustainable Stock Exchange Initiative
NZX today announced that it has joined the United Nations Sustainable Stock Exchange (SSE) initiative as a partner exchange.
SGX trading glitch a blip on the radar
The New Paper
Apart from penny stock selloff and STI’s 1% plunge, an unexpected tech wrangle disrupted trading early yesterday morning
Is IEX Selling “Snake Oil” to Retail Investors?
David Weisberger – Traders
The average person today equates the term “snake oil salesman” with someone selling a product that they know does not work for the ailments they promote it for. What is less well known is that snake oil is a legitimate cure for some ailments. Snake oil is rich in omega-3 fatty acids, particularly the Chinese water snake, which was what 19th century Chinese immigrants used as a folk remedy.
Deutsche Bˆrse Group GFF Securities Lending CCP Luncheon – Paris, 22nd March 2017
Deutsche Bˆrse Group Global Funding & Financing (GFF) hosted a Securities Lending CCP luncheon in Paris on Wednesday 22nd March. The event was an opportunity for GFF to gather the key Paris-based market participants for an open and interactive forum to discuss the status and progress of the Lending CCP.
FX Margins – Effective April 18, 2017
As per the normal review of market volatility to ensure adequate collateral coverage, the Chicago Mercantile Exchange Inc., Clearing House Risk Management staff approved the performance bond requirements for the following products listed in the advisory at the link below.
The rates will be effective after the close of business on April 18, 2017.
Treasury Chief Pushes UK To Fight For Fintech Industry
Paige Long – Law360
The financial technology sector will play a crucial role in mitigating any economic damage from Brexit, the U.K.’s Treasury chief said Wednesday, urging industry players and regulators to continue pursuing overseas markets and partnerships.
How blockchain is enabling a smooth shift towards a more efficient market
Business Insider India
Will blockchain and its associated technologies be used to replicate existing oligopolies online or will they truly open up and enable all market participants to engage in a more democratic and open marketplace?
Equinix Experiences Significant Growth in AWS Direct Connections
Equinix, Inc. (Nasdaq: EQIX), the global interconnection and data center company, today announced that it has become an Advanced Technology Partner in the AWS Partner Network (APN). The Advanced designation is the highest level an APN Technology Partner can achieve, and it underscores Equinix’s ongoing commitment to serving AWS customers by providing direct and secure access inside its global footprint of International Business Exchange (IBX) data centers.
Algomi Partners With OpenFin To Bring Open Stack Technology To Fixed Income Markets – Move To HTML5 Allows Algomi To Deploy Software And Roll Out Updates Rapidly, Responding To Client Needs And Changing Market Conditions
Algomi, the network company providing information-matching solutions for the optimization of fixed income liquidity, today announced a partnership with OpenFin, the world’s first common operating layer for financial desktop applications.|
Japan’s Government Develops Method for Assessing Blockchains
Stan Higgins – Coindesk
In light of the hype and lack of clarity surrounding blockchain, one of Japan’s government ministries has developed a methodology for evaluating projects in the industry.
Goldman Sachs Managing Director Joins Blockchain Startup Chain
Stan Higgins – Coindesk
Blockchain startup Chain has named a Goldman Sachs managing director as its new president.
Tom Jessop is joining the firm after serving as Goldman’s managing director for business technology development since January 2016, according to LinkedIn.
Twice-Bitten Traders Take No Chances With French Election Risk
Stefania Spezzati – Bloomberg
Goldman, Deutsche Bank recommend selling French debt into vote; Pimco says selling euro versus Swiss franc is ‘logical hedge’
After last year’s political shocks from the U.K. and the U.S., investors are taking no chances with the risk of a French version.
Young White America Is Haunted by a Crisis of Despair; “America is not a great place for people with only a high school degree, and I don’t think that’s going to get better anytime soon.”
Jeanna Smialek – Bloomberg
Ryan Johnson was 22 when he succumbed to a heroin addiction that had intensified as the Erie, Pennsylvania, high school graduate grew disillusioned with his future. His mother found him in his room with his head slumped and lips blue.
SEC Probes Hedge Fund That Promises Investors No Losses
Simone Foxman, Matt Robinson and Margaret Newkirk – Bloomberg
Statim Holdings Inc., an Atlanta-based firm that has guaranteed investors in its main hedge fund won’t lose money, is under investigation by the U.S. Securities and Exchange Commission, according to people familiar with the matter.
Update: FCA identifies asset management concerns and unveils platform review In regulator’s Sector Views paper
Natalie Kenway – Investment Week
The Financial Conduct Authority (FCA) has identified a number of areas of focus within the asset management sector for the coming year, flagging concerns that investment managers are overpaying for services and market stability could be affected by the “disorderly wind-down” of portfolios, while it also announced a platform competition review.
FCA Sets Out ‘Mission’ as British Bank Regulator Ushers In New Era
Suzi Ring – Bloomberg
‘Mission’ published Tuesday setting out principles, priorities; Brexit, PPI campaign are focus for next year in business plan
The U.K. Financial Conduct Authority will prioritize supporting the government with Brexit and helping consumers mis-sold payment-protection insurance, according to its business plan published alongside a “Mission” statement that aims to usher in a new era at the regulator.
Andrew Bailey speech at press conference for the publication of FCA corporate documents
Speech by Andrew Bailey, Chief Executive of the FCA, at the press conference for the publication of FCA corporate documents.
FCA to review liquidity management policies; Liquidity management highlighted as a focus for the UK regulator this year.
Hayley McDowell – The Trade
The Financial Conduct Authority (FCA) is to review its policy options in relation to fund liquidity management, having stated liquidity remains a significant risk for capital markets.
Monthly Disciplinary Actions April 2017
FINRA has taken disciplinary actions against the following firms and individuals for violations of FINRA rules; federal securities laws, rules and regulations; and the rules of the Municipal Securities Rulemaking Board (MSRB).
Expanding ISDA SIMM Coverage
Developing the ISDA SIMM was never going to be a one-time deal – for ISDA to roll it out for the September 2016 implementation, and then walk away. It was always recognized that regular updates and recalibrations would be necessary, in line with regulatory requirements. And an important set of updates was introduced this month.
SIFMA Comment Letters Critical of DOL Fiduciary Rule; Calls for Further Extension, Suggests Path Forward for New Secretary
SIFMA today submitted a comment letter to the Department of Labor regarding the Department’s proposed delay and reconsideration of its fiduciary regulation. SIFMA AMG submitted a separate comment letter. In both cases, SIFMA and SIFMA AMG call for the DOL to delay the applicability of the rule beyond June 09, 2017 in order to allow for a proper review of the rule, consistent with the President’s February 3, 2017 memorandum.
Investing and Trading
Asset managers unprepared for shift from active to passive investing; New study finds fund managers have no real methods of dealing with mass shift from active to index-based investing.
Hayley McDowell – The Trade
Head traders at US equity asset managers are unprepared for a mass shift of assets from active to passive products, according to new research.
Exchange traded funds attract record inflows in first quarter; Investors continue their shift from active management in protest at high fees
Chris Flood – FT
Exchange traded funds attracted record inflows in the first three months of 2017 as investors continue to move out from traditional actively managed funds in protest against inconsistent performance and high fees.
Silver Lake Raises $15 Billion Fund for New Tech Deals
Michael J. de la Merced – NY Times
Over the past decade, the investment firm Silver Lake has spearheaded some of the most prominent private equity deals involving technology and media, including the takeovers of Dell Inc. and Ultimate Fighting Championship.
Deutsche Bank hires equities veteran from Citadel; Deutsche Bank has revealed several new appointments within the global markets team for the Americas region.
Hayley McDowell – The Trade
Deutsche Bank has appointed a veteran from Citadel’s equities unit, Surveyor Capital, to head up its US client strategy for global markets.
BofA profits rise 40%, bolstering evidence of post-crisis earnings rebound
Alistair Gray – FT
Bank of America has produced its third successive rise in quarterly profits, giving its chairman and chief executive Brian Moynihan evidence showing a sustained turnaround is underway after years of post-crisis underperformance.
Goldman Sachs profit misses estimates on trading weakness
Goldman Sachs Group Inc (GS.N) reported a lower-than-expected quarterly profit as gains in investment banking were offset by weak trading revenue.
Expected Fed Pick on Collision Course With Current Members on Rates
Kate Davidson and Ryan Tracy – WSJ
President Donald Trump’s expected choice to be vice chairman at the Federal Reserve has called for setting interest rates using a formula, setting up a clash with current officials who have warned such an approach could undermine the central bank’s effectiveness. Randal Quarles, an investment-fund manager from Utah, is expected to be selected as the Fed’s vice chairman for bank supervision, a senior official said.
Credit Suisse Pay Cuts Fail to Win Over Shareholder Advisers
Jan-Henrik Foerster – Bloomberg
Glass Lewis says voluntary cuts are ‘too little too late’; ISS continues to oppose all pay plans for board, executives
Credit Suisse Group AG continues to face opposition to its pay plans from major shareholder advisory groups even after executives and directors offered to forgo some of their compensation.
BofA’s profit boosted by surge in trading, investment banking
Bank of America (BAC.N) reported a higher-than-expected jump in quarterly profit as bond trading surged and the lender earned more from advising on debt and equity offerings and deals.
What satellite images reveal about China’s economy
Steve Goldstein – MarketWatch
Chinese economic data has a bad reputation for accuracy, and it’s often said to be overstated as China’s government, particularly at the provincial level, tries to burnish its reputation. But three economists, including two from the New York Fed, say the problem may actually be the opposite ó that official Chinese economic data understates performance from the world’s second-largest economy.
Global SWFs sees slowdown in asset growth, says Preqin
Asia Asset Management
Global economic uncertainties have led to a sharp slowdown in AUM growth for global sovereign wealth funds (SWFs) over the past two years, according to London-based data provider Preqin. Total AUM held by 76 SWFs globally grew just 1% to US$6.59 trillion in the 12 months to March 2017, even slower than the 3% growth in the year to March 2016, when AUM stood at $6.51 trillion, Preqin says in its latest review of SWFs released last week (April 12).
A Big Bond for Africa
Nancy Birdsall and Ngozi Okonjo-Iweala – Project Syndicate
The countries of Sub-Saharan Africa have reached a critical juncture. Strained by a collapse in commodity prices and China’s economic slowdown, the region’s growth slipped to 3.4% in 2015 – nearly 50% lower than the average rate over the previous 15 years. The estimated growth rate for 2016 is lower than the population growth rate of about 2%, implying a per capita contraction in GDP.
Bank Brexit Exodus Seen Hastened by Close Regulator Scrutiny
John Glover and Richard Partington – Bloomberg
Bank of England deadline for contingency plans set for July 14; European Central Bank says it can take six months for approval
European and U.K. regulators risk inadvertently hastening the loss of some banking operations from London by pushing lenders to make detailed plans for the worst-case Brexit scenario, according to people familiar with the matter.
Robert Taylor, Innovator Who Shaped Modern Computing, Dies at 85
John Markoff – NY Times
Like many inventions, the internet was the work of countless hands. But perhaps no one deserves more credit for that world-changing technological leap than Robert W. Taylor, who died on Thursday at 85 at his home in Woodside, Calif.